TAOX 10-K & 10-Q changes, risk factors and insider trading

Our adoption of a digital asset treasury strategy centered on TAO and participation in the Bittensor network may not be successfully implemented and exposes us to significant operational, market, cybersecurity, and regulatory risks.

In June 2025, we adopted a differentiated digital asset treasury strategy that concentrates our excess liquidity in TAO, the native token of the Bittensor network, and contemplates staking and other on‑chain activities designed to earn yield and potentially increase our TAO exposure over time. This strategic shift departs from traditional cash management and requires new and evolving operational, technical, accounting, compliance, and risk‑management capabilities. There is no assurance that we will be able to execute, scale, or profitably maintain this strategy as currently contemplated, within the anticipated timeframes, or at all. Any shortfall or delay in building and maintaining the necessary infrastructure, internal controls, vendor oversight, and personnel expertise could materially adversely affect our business, results of operations, and financial condition.

Our TAO‑focused activities depend on the design, security, and performance of the Bittensor network, a decentralized AI blockchain with a novel incentive and consensus design often described as Proof of Intelligence, implemented across a Subtensor base chain and AI subnets. The Bittensor protocol, its software clients, validator and miner incentive mechanisms including Yuma consensus and subnet‑level scoring, and its governance model continue to evolve and may contain defects, vulnerabilities, or design tradeoffs that create operational disruptions, unexpected economic outcomes, or security incidents. We do not control or have any ability to meaningfully influence the development, governance, or security of the Bittensor network. Changes to protocol rules, software releases, forks, governance processes, or emergency measures, whether to address bugs, exploits, or performance, can occur on short notice, may be contentious, and could impair staking operations, reduce rewards, or adversely affect the TAO market. Past network security events and rapid protocol changes illustrate these risks and the potential for downtime, loss of confidence, or adverse impacts on TAO’s value.

To participate in staking and similar on‑chain activities, we rely on specialized infrastructure and third‑party service providers, including custodians and validators, for critical functions such as key management, staking delegation, software upgrades, and node uptime. Errors, malfunctions, outages, performance degradation, or cybersecurity incidents at any of these providers, or within our own systems, could result in the permanent loss, slashing, or inaccessibility of staked or unstaked TAO, missed rewards, or the inability to transact or rebalance our treasury in a timely manner. Because Bittensor’s AI workloads and validations depend in part on off‑chain infrastructure, failures or manipulation in those off‑chain processes can also negatively affect on‑chain incentives and our staking outcomes. We may be required to incur unanticipated costs to adapt to protocol updates, add redundancy, or transition providers, which may not be successful.

The regulatory environment applicable to public companies pursuing cryptocurrency treasury strategies, and to crypto asset markets, staking, and decentralized AI networks in particular, remains uncertain and continues to evolve. We are subject to ongoing scrutiny by regulators and listing authorities, and future interpretations or rulemakings by the SEC, Nasdaq, or other domestic or foreign regulators could impose registration, disclosure, custody, broker‑dealer, exchange, investment company, commodity, sanctions, AML and KYC, tax, or other requirements that are costly to implement, restrict our activities, or require changes to our strategy. Future classification of TAO or staking rewards as securities, commodities, or other regulated instruments could impose significant compliance obligations, increase costs, or limit our ability to continue our current activities. Any adverse regulatory developments, examination findings, enforcement actions, accounting guidance, or changes in tax treatment applicable to TAO, staking rewards, or our treasury practices could materially adversely affect our operations, financial condition, and the market for our securities.

We may seek to raise additional capital in the future to support our digital asset treasury strategy, including the acquisition of TAO, and we cannot predict the timing of any such financing.

We may pursue additional financing to support our digital asset treasury strategy, which may involve acquiring, holding, or managing TAO, as part of our corporate treasury operations. These financing activities could include the issuance of equity or equity-linked securities in public offerings, as well as issuing equity or equity-linked securities in exchange for TAO, which may result in substantial dilution to existing stockholders. The timing, amount, and terms of any such financing will depend on market conditions and our strategic objectives, and we cannot predict when or if such financing will occur. Any such financing may not be available on favorable terms, or at all.

In addition, the value and volatility of digital assets like TAO may require us to maintain higher levels of liquidity or collateral, potentially increasing our need for capital. If we issue additional shares or securities convertible into or exercisable for shares of our common stock, our existing stockholders may experience dilution of their ownership interests, and the market price of our common stock may decline. There can be no assurance that any future financing will be available on acceptable terms, or at all, and any inability to raise capital when needed could adversely affect our financial condition and strategic initiatives.

Our financial results are heavily dependent on TAO, significantly increasing our exposure to crypto asset market volatility, valuation uncertainty, and concentrated credit risks.

Our holdings in crypto assets are focused on TAO, which subjects us to heightened risks related to asset concentration and market volatility. A substantial decline in demand for TAO, if not offset by interest in other assets, would materially and adversely impact our revenues and overall financial performance. This concentration also amplifies our vulnerability to downturns in the broader crypto market, exposing us to outsized losses, asset write-downs, liquidity constraints, and difficulties in meeting collateral obligations.

Moreover, a significant percentage of the TAO tokens in circulation is concentrated among a relatively small number of holders, including network validators, early participants, and large-scale staking entities. This concentration increases the risk that a small number of parties could exert outsized influence over governance decisions, validator selection, network upgrades, and the market for TAO. If large holders were to coordinate, they could act in ways that disadvantage us or smaller participants, including by influencing the direction of protocol development, restricting access to certain subnets, or taking positions that destabilize the market price of TAO. Concentrated ownership also heightens the risk of large, sudden dispositions of TAO, which could adversely affect liquidity and price stability. Any of these developments could impair our ability to rely on the Bittensor network, reduce the value of its holdings, or otherwise adversely affect its business, financial condition, and results of operations.

Additionally, accurately valuing crypto assets, including TAO, can be challenging, especially during periods of market stress. Crypto assets trade globally across numerous exchanges, many of which are lightly regulated, causing significant price volatility and disparities across trading venues. The absence of a centralized market or definitive closing price means valuations can be unreliable or temporarily distorted due to liquidity shortages, market disruptions, or manipulation. Such valuation uncertainties complicate the accurate determination of our financial position and make it difficult for auditors to verify our asset values.

Moreover, new accounting standards requiring adjustments to how we mark crypto assets to market values could introduce substantial fluctuations in our reported earnings. These valuation changes might also trigger unintended tax liabilities, resulting in increased tax expenses or additional compliance burdens.

Our concentrated crypto asset holdings further expose us to credit risks. For instance, maintaining large asset balances with a single custodian or significant lending exposure to a single counterparty within the crypto industry could substantially increase the severity of an adverse event, as the failure or insolvency of such entities would directly jeopardize a major portion of our assets.

If we fail to successfully implement our crypto asset-related business strategy, or if our strategy proves ineffective, our business, financial condition and results of operations could be materially and adversely affected.

Our future performance depends significantly on the successful execution of our business strategy, which is focused, in part, on acquiring, holding and staking TAO and participating in the TAO ecosystem. This strategy is novel, involves exposure to emerging technologies and markets, and requires effective management of operational, technological, and financial resources. The successful implementation of this strategy will place substantial demands on our management team and infrastructure. Moreover, given the rapidly evolving regulatory and technological landscape surrounding crypto assets, there is no assurance that our strategy will be successful, or that it will result in improved financial performance or long-term shareholder value. We may, at any time, modify or abandon certain components of our business plan in response to market conditions, regulatory developments, or other factors. Additionally, our strategy is untested over extended market cycles, and unforeseen complications, operational failures, regulatory shifts, or insufficient demand for TAO could significantly impede our business objectives. If we are unable to effectively implement our strategy, or if the strategy does not yield the anticipated benefits, our business prospects, growth potential, and profitability could be materially and adversely impacted.

We may lack effective tools to hedge against TAO’s price volatility, as no established derivatives market exists for TAO and broader crypto hedging instruments are generally limited to major tokens like Bitcoin. This leaves us more exposed to adverse market swings and unable to mitigate downside risk through conventional strategies. Our concentrated TAO holdings also present liquidity challenges, as TAO’s trading volume is limited and large sales could depress prices and trigger steep losses. These constraints are compounded by the small number of platforms supporting TAO, some of which are offshore or decentralized. In adverse market conditions, we may be unable to liquidate TAO at reasonable prices, potentially impairing our ability to meet financial obligations. These combined factors make our treasury strategy more volatile and less liquid than one based on traditional assets.

Managing crypto assets like TAO also introduces operational complexities and control risks distinct from traditional treasury functions. Our limited experience in large-scale crypto custody increases the risk that our procedures may be inadequate to safeguard assets or accurately record transactions. Effective crypto asset management requires strict private key security, wallet controls, and transaction protocols; failures in these areas could result in irreversible losses. Even with third-party custodians, we must ensure proper oversight, reconcile blockchain data with financial records, and comply with evolving accounting standards. Human error, phishing attacks, or insider misconduct could also expose us to theft or fraud. Our finance team may experience a steep learning curve in navigating blockchain-based accounting, and weaknesses in our systems could lead to delays, errors, or regulatory issues. While we are investing in controls and personnel, there is no guarantee our risk management will remain effective as the crypto landscape evolves.

Our crypto asset strategy also relies heavily on evolving blockchain technology, which is subject to rapid change, technical challenges, and potential obsolescence. Protocols underlying TAO, including but not limited to key subnets, could experience security vulnerabilities, errors in code, malicious attacks, or other technical failures. Any such incidents could undermine confidence in TAO, result in significant financial losses, and materially impair our business. Additionally, future technological advances, including quantum computing, could potentially compromise the cryptographic foundations of blockchain technology underlying TAO, posing additional risk to the security and long-term viability of our crypto asset holdings.

Bittensor’s TAO token, generated via a decentralized “Proof-of-Intelligence” mining process, faces significant volatility, governance centralization risks, regulatory uncertainty, limited liquidity, and ongoing security vulnerabilities related to its AI-focused consensus model and underlying decentralized infrastructure.

Bittensor’s native token, TAO, was launched via a “fair launch” mining process in January 2021 and, according to public reports, without a pre-sale, ICO, or pre-mined allocation. Circulating tokens were earned by miners, promoting decentralization but potentially resulting in wealth concentration among early participants. The project is managed by the Opentensor Foundation, a small team of developers, making it heavily dependent on their ongoing involvement. Until early 2024, governance power was concentrated in a small number of validators, posing centralization risks. Although a new dynamic governance system was introduced in 2025, it remains untested and could present unforeseen challenges and conflicts of interest.

TAO tokens are generated through Bittensor’s “Proof-of-Intelligence” consensus mechanism, where validators assess AI contributions from miners to distribute rewards. This approach, however, introduces potential vulnerabilities such as subjective evaluations, collusion, and technical security risks. Notably, in July 2024, a supply-chain attack led to theft of private keys and prompted a temporary network shutdown, underscoring existing security concerns and highlighting the network’s reliance on centralized emergency controls. TAO has a capped supply of 21 million tokens, with about 9 million mined as of mid-2025, and a halving of token issuance every four years, the next scheduled for August 2025. These dynamics could influence miner incentives and affect market liquidity.

TAO’s value is speculative and highly dependent on future adoption and ecosystem growth. Trading liquidity is limited and primarily concentrated on offshore exchanges, increasing price volatility and counterparty risks. Currently, derivatives markets for TAO are limited, and while products such as the Grayscale Bittensor Trust may enhance market accessibility, they carry additional liquidity and regulatory uncertainties.

Bittensor, a decentralized AI blockchain network using a “Proof-of-Intelligence” consensus model tied to subnet output evaluation and performance for purposes of allocating token emissions and incentives (distinct from Subtensor’s separate mechanism for ordering transactions and finalizing blocks), faces significant technical, operational, scalability, governance, and regulatory risks, including dependence on third-party off-chain infrastructure, potential vulnerabilities in AI validation processes, limited scalability, decentralized governance inefficiencies, and regulatory uncertainties, all of which could adversely impact the value and adoption of its native TAO token.

TAO functions on the Bittensor network, which operates as a decentralized AI network built on a custom blockchain utilizing the Substrate framework and employs a novel consensus mechanism commonly referred to as “Proof-of-Intelligence,” whereby subnet output evaluation (and the resulting token emission and incentive allocations) are tied to performance within specialized subnets. this Proof-of-Intelligence consensus mechanism is distinct from Subtensor’s separate mechanism for transaction ordering and block finality. The complex architecture of this system introduces significant technical and operational risks. Given the sophisticated blockchain infrastructure and Bittensor’s specialized AI-focused subnets, there exists a heightened potential for software errors, system vulnerabilities, and unforeseen operational disruptions. Such events could result in extended network downtime, diminished user confidence, or even irreversible losses of digital assets.

Moreover, Bittensor heavily depends on off-chain infrastructure for executing AI computations, leading to inherent trust and transparency issues. Users must rely on third-party providers to execute AI tasks accurately and securely. Any inaccuracies, misreporting, malicious actions, or operational failures in these off-chain processes could significantly damage the reliability and overall reputation of the Bittensor network and negatively impact the TAO token’s value.

The decentralized nature of Bittensor further presents notable scalability challenges. As participation increases, the complexity and resource-intensiveness of validating and evaluating AI model contributions can create bottlenecks and degrade system performance.

These scalability constraints could prevent Bittensor from effectively competing with centralized AI platforms, potentially limiting widespread adoption and constraining growth in demand for the TAO token.

In addition, maintaining robust quality control and verifying AI outputs within the Bittensor ecosystem pose ongoing challenges. While the platform employs a competitive, reputation-based reward system to incentivize quality contributions, this structure remains vulnerable to risks such as validator collusion, sabotage among competing model providers, and manipulation of reputation or reward mechanisms. Without robust on-chain verification processes, incorrect or deceptive AI outputs may proliferate, eroding trust and undermining the perceived value of services provided through the network.

The value and liquidity of the TAO token also depends substantially on its adoption among developers, researchers, and other users within decentralized AI markets. If Bittensor fails to expand beyond niche communities or becomes overshadowed by centralized AI alternatives, it may experience decreased demand for its services. This scenario would negatively impact the market price and liquidity of TAO, adversely affecting our financial position.

The decentralized governance structure of Bittensor, managed through consensus among TAO token holders, also introduces additional risks related to decision-making delays, political friction, and governance inefficiencies. Regulatory ambiguity and increased scrutiny surrounding decentralized AI systems and crypto tokens further compound these governance challenges. Adverse regulatory actions, unclear legal interpretations, or new compliance obligations could impose substantial additional costs or operational restrictions or potentially force cessation of certain business activities altogether. This regulatory uncertainty could also deter institutional adoption and broader acceptance of Bittensor, further limiting its potential growth and stability. Collectively, these technical, operational, market, governance, and regulatory risks could result in substantial volatility in the value of TAO, materially affecting our business strategy involving this asset.

In addition, Subtensor currently uses a proof-of-authority model under which a small, permissioned set of validators operated by the Opentensor Foundation produces and finalizes blocks. By contrast, Yuma Consensus is an on-chain emissions algorithm that computes reward allocations from validator rankings of model performance and does not provide transaction ordering, block production, or ledger finality. Reliance on this authority set centralizes transaction ordering and finality and increases the risk of network halts, delayed processing, or selective censorship if operators fail, are compromised, or change policies. Compromise or misuse of authority signing keys, software defects, or misconfiguration may require emergency coordination or restricted operating modes and could disrupt our ability to acquire, transfer, or dispose of TAO, potentially triggering exchange or custodian pauses, reduced liquidity, wider spreads, and price volatility. Concentration at the authority layer also creates a single point of operational and regulatory leverage: legal orders, sanctions, or jurisdictional restrictions directed at the Foundation or authority operators could compel blocking, reordering, or exclusion of transactions or participants. The composition, permissions, and parameters of the authority set may change on short notice, and elevated security and key-management demands increase the risk of downtime or reorganizations; authority control can also amplify governance disputes. Collectively, these factors may impair network reliability and perceived decentralization, reduce adoption and TAO liquidity, and adversely affect our business, financial condition, and results of operations.

The open-source and decentralized design of crypto asset networks, including the Bittensor network on which the TAO crypto asset functions, exposes us to risks related to forks, air drops, incidental rights, and related technological and operational disruptions.

Blockchain networks like Bittensor can also undergo “hard forks,” splitting into separate networks due to planned upgrades, technical disagreements, or vulnerabilities. In addition, events such as air drops or the granting of incidental rights may occur, resulting in the distribution of new or derivative digital assets. These events can create or duplicate assets and raise practical and legal considerations regarding whether, and how, holders are able to receive, claim, or use such assets.

In the event of an airdrop, hard fork, or the granting of incidental rights, we will decide how to proceed using its best judgment and, where required, after obtaining advice from legal, tax, accounting, and cybersecurity professionals. Public blockchain events such as airdrops and hard forks may create new assets or duplicate existing assets. We may lack the technical capability, private keys, or custodial support to receive, claim, hold, transfer, or secure these assets. Hard forks can enable replay of transactions and may require changes to key management and software. Claiming mechanisms and unsolicited token transfers can expose us to phishing, malicious smart contracts, dusting, and other cyber threats. Exchanges, custodians, and payment processors may pause or refuse support for a new asset or chain, which can disrupt our products and increase costs. In addition, receipt of airdropped or forked assets may be treated as taxable income upon our ability to exercise control, even if we cannot promptly monetize the asset, which could result in tax liabilities that exceed any related proceeds. Valuation and timing for tax purposes are uncertain and may be challenged by tax authorities.

Regulators may also determine that certain airdropped or forked assets are securities, derivatives, or otherwise subject to registration, licensing, or compliance obligations, which could restrict our ability to hold, transfer, or monetize such assets and expose us to enforcement risk. The accounting treatment of these assets is complex and unsettled, and any misjudgment in recognition, valuation, or disclosure could lead to misstatements, restatements, or disagreements with our auditors. In addition, our custodians or other service providers may reserve contractual rights to retain or decline to support airdropped or forked assets, which could prevent us from realizing any economic benefit from these events. Any of these events could result in loss or theft of assets, unexpected tax obligations, service interruptions, or reduced revenue, and could adversely affect our business, financial condition, and results of operations.

Our operating results are dependent on the price of TAO. If such price declines, our business, operating results, and financial condition would be adversely affected.

Any declines in the volume of crypto asset transactions, the price of crypto assets, or market liquidity for crypto assets generally may adversely affect our operating results. We have significant investments in TAO. As of October 31, 2025, we held digital intangible assets valued at approximately $29.0 million. Thus, changes in the value of TAO will generally have a significant impact on our results. Our operating results will be impacted by the revenues and profits we generate from the purchase, sale, and trading of crypto assets.

The market price of Bittensor’s TAO token has been highly volatile and could decline sharply at any time. For example, TAO’s price experienced a rise of over 1000% in 2024, reaching a high above $767 in April 2024, and subsequently corrected by roughly 45% from that peak. Such extreme fluctuations could significantly increase or reduce the value of our TAO holdings within a short period. The market price of TAO can be driven by a variety of factors beyond our control, including speculative investor behavior, regulatory developments, changes in market liquidity, the adoption and performance of the Bittensor network, cybersecurity incidents, macroeconomic events, or negative publicity about digital assets generally or TAO specifically. Because we have invested a substantial portion of our treasury in TAO, a major downturn in TAO’s market price could materially impair the value of our assets and even jeopardize our ability to meet cash needs or financial obligations.

The price of crypto assets and associated demand for buying, selling, and trading of crypto assets have also historically been subject to significant volatility. For instance, in 2017 and 2021, the value of certain crypto assets, including bitcoin, experienced steep increases in value, followed by steep declines in 2018 and 2022. After recovering from the 2018 decline and reaching record highs in December 2021, the value of the total crypto market cap declined by approximately 64% in the twelve months ended December 31, 2022. The collapse of several companies in the crypto asset industry such as Celsius, Voyager, and FTX impacted crypto asset prices in 2022 and the majority of 2023. We believe that the approval and launch of spot-based Bitcoin ETFs in the U.S. in the first quarter of 2024 and the election of President Donald Trump in the fourth quarter of 2024 contributed to an increase in the crypto market capitalization during 2024. However, the crypto market subsequently experienced a general decline in the first half of 2025.

The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, and may significantly decline in the future, without recovery. Such uncertainty and volatility depend on a number of factors, including:

Furthermore, crypto asset prices may be subject to market manipulation or distortion, including pump-and-dump schemes, wash trading, spoofing, and front-running, particularly on unregulated exchanges. Such manipulation could significantly impact the perceived value and trading volume of TAO and undermine investor confidence in the crypto asset market, adversely affecting our business.

There is no assurance that any crypto asset will maintain its value or that there will be meaningful levels of trading activities. In the event that the price of crypto assets or the demand for trading crypto assets decline, our business, operating results, and financial condition could be adversely affected.

Our crypto asset holdings are illiquid and may be difficult to sell or use as collateral. Crypto asset holdings are less liquid than cash and cash equivalents and may not serve as a source of liquidity for us to the same extent. During times of market instability, we may not be able to sell our crypto assets at favorable prices, or at all. As a result, our crypto asset holdings may not be a reliable source of funds for working capital needs. Additionally, we may be unable to use our crypto assets as collateral for capital-raising transactions, particularly when the market is unstable or prices have declined significantly. This lack of liquidity could adversely affect our business and financial condition.

Certain of our directors, officers, employees and independent contractors may hold crypto assets.

Certain of our directors, officers, employees, and independent contractors may hold crypto assets, including the same crypto assets in which we invest, or have other crypto-related personal investments. Such persons may actively invest in crypto projects and crypto assets on their own behalf, which could incentivize them to take actions (or refrain from actions) that favor their personal crypto holdings or related business interests over our interests and the interests of our shareholders. Our affiliates may also have substantial direct investments in crypto assets and are under no obligation to prioritize or consider our interests when managing those investments, potentially leading to conflicts of interest. Certain of our directors, officers, employees, and independent contractors may have outside business ventures or participate in other crypto-related initiatives, potentially diverting their time, attention, and resources away from our Company. Our internal policies and procedures may not fully eliminate these conflicts, and there is no assurance that the personal or outside interests of these individuals will consistently align with our interests or those of our shareholders. If such conflicts are not adequately managed, our decision-making processes, corporate governance, market perception, and overall financial performance may be adversely affected.

We are highly dependent on James Altucher and other key personnel, and our inability to retain or attract experienced individuals could materially harm our business.

We are highly dependent on the services of our TAO token consultant, James Altucher, for leading our TAO-based revenue generation strategy. Because we operate in a relatively new industry that requires highly skilled and technical personnel, our future success is highly dependent on the talents and contributions of Mr. Altucher. The loss of Mr. Altucher could disrupt our operations and have a material adverse effect on our business.

Mr. Altucher is free to engage in activities outside of the Company, although he is obligated under his consulting agreement to devote his TAO-related activities exclusively to us. Moreover, his contract expires on June 8, 2026. While Mr. Altucher has entered into a consulting agreement with the Company, Mr. Altucher is not expected to devote his full time, attention or efforts to us. Mr. Altucher may continue to manage significant crypto assets outside of the Company, which may consume some of his time, attention and efforts.

Additionally, our future growth and success depend on our ability to attract, retain, and motivate skilled employees and contractors in the crypto asset industry. Competition for qualified personnel in the crypto asset and blockchain industries is intense. The specialized nature of blockchain technology and crypto asset markets means there is limited availability of highly experienced personnel. Our growth strategy depends not only on retaining key individuals like Mr. Altucher but also on our ability to attract and retain additional experienced professionals. Any inability to secure or retain such personnel due to competitive pressures, reputational factors, regulatory uncertainty, or market conditions could adversely impact our ability to execute our strategic initiatives and could materially harm our business.

Our TAO holdings are likely to be less liquid than our existing cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Historically, the TAO market has been characterized by significant volatility in price, lower trading volumes, and less liquidity compared to major crypto assets like Bitcoin and traditional fiat currencies. During times of market instability, we may not be able to sell our TAO at favorable prices or at all. For example, TAO currently trades on a limited number of centralized and decentralized platforms, some of which may lack sufficient depth or infrastructure to support large-volume trades or institutional execution. As a result, our TAO holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents.

Additionally, we may be unable to enter into term loans or other capital raising transactions collateralized by our unencumbered TAO or otherwise generate funds using our TAO holdings, particularly in times of market instability or when the price of TAO has declined significantly. If we are unable to sell our TAO, enter into additional capital raising transactions (including transactions using TAO as collateral), or otherwise generate funds using our TAO holdings, or if we are forced to sell our TAO at a significant loss in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

Additionally, we rely on third-party exchanges and custodians to facilitate transactions in TAO. These platforms may face operational disruptions, security breaches, regulatory enforcement, insolvency, or other issues beyond our control. Any impairment of our ability to access or transact on these platforms could limit our liquidity, force us into unfavorable asset sales, or prevent us from timely managing our crypto asset holdings, thereby materially affecting our operations and financial condition.

Regulatory change classifying certain digital cryptocurrency assets as “securities” could lead to our being subject to extensive regulation, which could result in significant costs or force us to cease operations.

Under Sections 3(a)(1)(A) and (C) of the Investment Company Act of 1940, as amended (the “1940 Act”), a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (2) it is engaged, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in the 1940 Act, and are not registered as an “investment company” under the 1940 Act as of the date hereof.

The legal and regulatory status of digital assets under U.S. federal and state securities laws remains uncertain and continues to evolve, and the Commission has not provided formal or binding guidance as to whether particular digital assets constitute “securities” for purposes of the federal securities laws. If the Commission, a court of competent jurisdiction, or another regulatory authority were to determine that any of the digital assets we hold, or transactions involving those assets, constitute “investment securities,” could result in our being deemed to meet the definition of “investment company” under the 1940 Act if the portion of our assets that consists of investments in our Cryptocurrency exceeds the 40% limit prescribed in the 1940 Act, which would subject us to significant additional regulatory requirements that could have a material adverse effect on our business and operations and may also require us to change the manner in which we conduct our business.

If we were required to register as an investment company under the 1940 Act, we would become subject to extensive and restrictive regulatory requirements, including limitations on our capital structure and leverage, restrictions on transactions with affiliates, custodial and valuation requirements, governance obligations, and enhanced reporting and compliance obligations. Compliance with these requirements would impose substantial costs, divert management attention, and could materially and adversely affect our business, financial condition, and results of operations. Moreover, our current business model is not designed to operate as a registered investment company, and registration may not be feasible.

The Commission has previously indicated that certain digital assets may be considered securities depending on their structure and use. Such determinations are highly fact-specific. Future developments could change the legal status of digital assets that we may hold, requiring us to comply with securities laws. Further, state regulators may conclude that the digital assets we hold are securities under state laws, requiring us to comply with state-specific securities regulations. States like California have stricter definitions of “investment contracts” than the Commission, increasing the risk of additional regulatory scrutiny. Such state-level determinations could subject us to additional regulatory obligations, enforcement actions, or limitations on our activities.

On June 9, 2025, in connection with the Company’s previously announced exploration of strategic opportunities, the Company announced the launch of a differentiated cryptocurrency treasury strategy focused on the pure play artificial intelligence (AI) crypto coin, TAO, the native cryptocurrency of Bittensor, a decentralized blockchain network for machine learning and AI. On June 25, 2025, the Company filed a Certificate of Amendment to its Amended and Restated Articles of Incorporation with the Secretary of State for the State of Delaware, effective June 26, 2025, to change the name of the Company from “Synaptogenix, Inc.” to “TAO Synergies Inc.” On September 26, 2025, the Company formed a subsidiary TAOX Florida Inc. for the purpose of facilitating the Company’s expansion into the cryptocurrency treasury strategy business.

In December 2024, we announced via press release that the board of directors of the Company (the “Board”) had formed an independent special committee (the “Special Committee”) to explore strategic opportunities to create and enhance value for investors, including promising drug development platforms and/or compelling new technologies and services.

As a result of the Special Committee’s efforts, the Company launched its differentiated cryptocurrency treasury strategy, as described above, to stake TAO for revenue generation and capital appreciation, a strategy which underscores the Company’s mission to create value for shareholders.

Background on TAO and Bittensor

Bittensor is a public Layer 1 blockchain, called Subtensor, built with the Substrate framework and organized into independent “subnets” where miners produce digital commodities (commonly AI outputs) and validators evaluate them. Depending on the subnet’s incentive mechanism, miners may produce digital commodities that can include, for example, text prompt completions and other question-answer outputs, vector embeddings and related semantic search or ranking outputs, code-related outputs, image generation outputs, and speech-to-text transcription outputs. On chain, an algorithm named Yuma Consensus aggregates validators’ rankings of miners to compute emissions (new tokens minted by the protocol) for miners, validators, stakers, and subnet creators. This mechanism is widely referred to in project materials as Bittensor’s “Proof-of-Intelligence” consensus model. In this context, “consensus” refers to stake-weighted convergence on subnet validator scoring used to allocate emissions and other incentives, and not to transaction ordering or block finality, which are currently provided on Subtensor through a separate proof-of-authority authority set. Subtensor’s transaction ordering and block finality are currently provided by a proof of authority model under which a small, permissioned “authority set” produces and finalizes blocks. TAO is the Network’s native token and is used to pay transaction fees, incentivize subnet participants, and for staking. Staking TAO affects how emissions and incentives are allocated (including by influencing validator stake weight and related reward calculations and, under dTAO (defined below), by staking into a subnet’s on-chain pool to receive that subnet’s alpha token) and may affect governance participation. Staking TAO does not itself validate or finalize Subtensor transactions. TAO is, however, also used for governance (including voting power that may be exercised directly or via delegation) and may be used to create/register subnets under protocol rules.

As of March 26, 2026, TAO’s circulating supply was approximately 10.8 million tokens with a market capitalization of approximately $3.62 billion, according to publicly available sources. The lifecycle of TAO follows a supply schedule. Approximately one block is produced every ~12 seconds, with 1 TAO per block minted before the first halving (about 7,200 TAO/day), and 0.5 TAO per block minted after the first halving (about 3,600 TAO/day). The first halving occurred when total issuance reached 10.5 million TAO on December 15, 2025. TAO is not halved on a daily basis. Instead, the per-block emission rate decreases by 50% when predetermined issuance thresholds are reached. TAO has a hard cap of 21,000,000 tokens. Subtensor transaction fees are paid in TAO. Current public documentation indicates that transaction fees are deducted from total issuance rather than distributed as rewards. Accordingly, subnet miners and subnet validators generally do not receive TAO as transaction-fee awards for validating transactions, and instead earn rewards primarily through protocol emissions. In addition, per current documentation, certain staking-related transactions are described as subject to a percentage-based fee (for example, 0.05% of the TAO amount being staked or unstaked), in addition to any weight-based transaction fees (in this context “weight” is a measure of compute time).

Under the February 13, 2025 Dynamic TAO (dTAO) upgrade, newly issued TAO is first routed to subnets under protocol rules that, as of November 2025, allocate TAO across subnets based on net TAO inflows from staking activity rather than subnet token prices, and staking into a subnet exchanges TAO for that subnet’s alpha token. Subnet alpha tokens are subnet-specific tokens a participant receives when staking TAO into the subnet’s on-chain market pool, and the alpha token to subnet exchange rate is generally determined by the pool’s reserves. Exits convert alpha tokens back to TAO at the prevailing pool exchange rate at the time of conversion, so outcomes are price sensitive. According to current documentation, emissions for each subnet are generally distributed at the end of every approximately 360 blocks, or about 72 minutes, and the subnet’s participant distribution is generally allocated 41% to miners, 41% to validators and their stakers, and 18% to the subnet owner. The Bittensor blockchain does not impose protocol-enforced delays (unbonding periods) in accessing unstaked TAO. That said, custodians, validators, liquidity pools, or other service providers and operational setups may impose operational, contractual, or practical limits on withdrawal timing or liquidity.

The initial Bittensor mainnet “Kusanagi” launched in January 2021, was followed by the “Nakamoto” upgrade in November 2021, then a fork to the current “Finney” chain on March 20, 2023. Subnets went live on October 2, 2023. Governance has transitioned to a bicameral model in which a Triumvirate (employees of the Opentensor Foundation) authors proposals and a Senate (a group of delegates who have elected to participate in proposals) must approve the proposals prior to implementation. The Senate is comprised of the top delegate hotkeys by stake. In this specific context, a “hotkey” is the operational public key used by a participant to conduct on-chain actions (including by a validator), and a “delegate” is a hotkey that accepts delegated TAO from third parties for staking. “Top” refers to the delegate hotkeys with the highest total stake at a given time. Per current documentation, the Senate has 12 seats (although not all must be filled), and a delegate generally must reach at least 2% of total network stake amount through delegation or self-stake and elect to participate in the Senate. If all twelve Senate seats are filled, and a delegate wishes to join, the lowest stake member is replaced. Because Senate membership is stake-based, governance influence may be concentrated among large stakers and delegates.

Our Cryptocurrency Asset Strategy

In June 2025, we adopted a differentiated cryptocurrency treasury strategy focused on the pure play artificial intelligence (AI) crypto coin, TAO, the native cryptocurrency of Bittensor. Bittensor is a decentralized blockchain network for machine learning and AI. This was a shift from our prior approach of holding excess cash (as defined below) primarily in FDIC-insured interest-bearing accounts. We now seek to allocate substantial portions of our excess cash to purchasing TAO, with the goal of obtaining an increased yield on excess cash by staking TAO for revenue generation and capital appreciation, a strategy that underscores our mission to create significant value for shareholders.

To identify “excess cash,” we first evaluate our cash, cash equivalents, and short-term investments (collectively, “cash assets”). We then estimate the amount of cash assets required to fund approximately 1.5 to 2.0 years of projected operating and working capital needs. Cash assets in excess of this estimated liquidity requirement are considered “excess cash” for purposes of our TAO accumulation strategy. By allocating a substantial portion of our excess cash to TAO, we generally mean that we seek to allocate between 75 percent and 100 percent of this excess cash to the purchase of TAO. However, actual allocation levels may vary due to market conditions, the prevailing price of TAO, liquidity needs, and other factors considered by management.

To guide our cryptocurrency asset purchases, our Board adopted a long-only TAO accumulation strategy and has delegated authority to our Executive Chairman, in consultation with internal personnel and external advisors, to determine the timing, size, and method of TAO purchases with the objective of maximizing tokens per share. Under this authority, management reviews our cash assets, identifies any excess cash as described above, and determines whether to allocate such excess cash to the acquisition of TAO. In addition to using excess cash, our acquisition strategy may also involve issuing debt or equity securities or undertaking other capital raising transactions, subject to market conditions, with the objective of using the proceeds to purchase additional TAO.

We have not established a specific target amount of TAO that we seek to hold. Instead, we monitor market conditions, liquidity needs, and financing opportunities in determining whether to make additional TAO purchases in the future. We view our TAO holdings as long-term holdings and expect to continue accumulating TAO over time. As of September 10, 2025, approximately 88% of our treasury holdings were invested in TAO. We do not hedge our TAO exposure and have no diversification strategy into other crypto assets. Accordingly, our treasury strategy currently reflects long-only exposure to TAO. However, we are exploring the potential implementation of hedging strategies to manage risks associated with digital asset price volatility; we have not implemented any hedging strategies to date, and there can be no assurance that any such strategies will be implemented or, if implemented, effective.

Although a liquid market for TAO exists, we have not monetized (i.e., sold) any TAO to date. All TAO is staked as soon as trade settlement permits, and we currently stake TAO through two staking providers - tao5 and Yuma. We only engage in TAO staking. In the future, we may explore additional yield-enhancement strategies, including participation in Bittensor subnets. Any such activity would likely be undertaken with a third-party partner possessing substantial subnet expertise.

Our Staking Program

We stake our TAO tokens, with the percentage staked varying based on various liquidity and operational considerations, and review this allocation periodically. All staking services are provided through BitGo pursuant to the terms of a Custodial Services Agreement (“CSA”) and the BitGo Staking & Delegation Services Terms (collectively, the “Staking Terms”) which are described below under the heading “Use of Custodians and Storage of TAO Tokens.” In addition, we have entered into a non-custodial Staking & Delegation Technology Services Agreement with Yuma Validator, LLC (the “Yuma Agreement”) under which Yuma operates a validator for root subnet staking on the Bittensor network. Yuma does not custody our TAO or any rewards. For 18 months following the effective date of that agreement, we are required to delegate at least 90% of TAO subject to root subnet staking to a Yuma validator.

Process of Staking

The Custodian currently supports staking TAO to the tao5 and Yuma validators pursuant to its Staking Terms. Under these terms, the Custodian or its designated third-party providers, with input from the Company, stake delegated TAO, and exercise any validation rights and voting rights (which do not include protocol governance or voting rights), and distribute net rewards subject to validator service fees. The Bittensor blockchain does not impose protocol-enforced delays or unbonding periods. We do not currently engage in subnet staking or participate in AMM pools, but may do so in the future. Yuma’s role is non-custodial, and its commission rate pursuant to the Yuma Agreement is the publicly posted validator commission on the Bittensor blockchain and may change from time to time.

The Bittensor Network

Bittensor is a public Layer 1 blockchain, called Subtensor, built with the Substrate framework and organized into independent “subnets” where miners produce digital commodities (commonly AI outputs) and validators evaluate them. On chain, an algorithm named Yuma Consensus aggregates validators’ rankings of miners to compute emissions (new tokens minted by the protocol) for miners, validators, stakers, and subnet creators. This incentive mechanism is widely referred to in project materials as “Proof-of-Intelligence.” TAO is the Network’s native token and is used to pay transaction fees, incentivize subnet participants, and for staking.

Validators

We rely on the Custodian to facilitate our staking activities with respect to TAO tokens. Through its staking services, the Custodian holds and stakes our TAO through its selected validators tao5 and Yuma.

All miner-performance validation in Bittensor occurs within subnets; block/transaction validation occurs on the Subtensor blockchain. Each subnet independently produces the digital commodities that are its focus, with the subnet creator defining an incentive mechanism for validators to use in judging miners’ work. Validators apply this incentive mechanism to miners, score their performance, and submit these weights to the Bittensor blockchain. These validator scores are then used by the Yuma Consensus algorithm to determine the proportion of the subnet’s emissions that should be allocated to each miner.

Each validator submits its rankings of miners it has evaluated to the Bittensor blockchain. The algorithm then considers all these rankings and seeks to identify which validators appear to provide the most reliable evaluations. Validators whose rankings appear to consistently align with those of other validators should gain more influence in the system, while validators that submit less reliable evaluations are expected to lose influence.

How We Earn Staking Rewards

As holders of TAO tokens we can stake any amount of the liquidity we hold to a validator. Also known as “delegation”, staking supports validators, because their total stake in the subnet, including stake delegated to them by others, determines their consensus power and their share of emissions. After the validator extracts their take, the remaining emissions are credited back to us in proportion to our stake with that validator. We stake TAO tokens through arrangements facilitated and managed by the Custodian and its selected validators, tao5 and Yuma (together, the “Validators”). For a further discussion of the risks related to staking, see “Risk Factors—Risks Related to Staking” elsewhere in this Annual Report on Form 10-K.

Use of Custodians and Storage of TAO Tokens

In June 2025, we entered into a Custodial Services Agreement (“CSA”) with BitGo Bank and Trust, N.A. (formerly known as Bitgo Trust Company, Inc. (the “Custodian”), which is a national trust bank chartered and regulated by the Office of the Comptroller of the Currency and licensed to act as a custodian, for a six-month initial term with automatic six-month renewals unless terminated. Termination may occur for convenience with 60 days’ prior written notice or for breach with 30 days’ notice. Assets held under the agreement are generally maintained in segregated custodial accounts, separate from the Custodian’s own assets and other clients’ assets per the CSA. The Custodian provides quarterly electronic account statements and, upon request, will confirm asset holdings. To value TAO held in our account, the Custodian electronically obtains USD equivalent prices from digital asset market data with amounts rounded up to the seventh decimal place to the right. Insurance coverage maintained by the Custodian is described further below. Access to the Company’s custodial account holding TAO is generally limited to persons designated by us through the Custodian’s user interface.

The Prime Broker (defined below) is permitted limited access to the Company’s custodial account solely to facilitate the execution of trades of TAO.

In June 2025, we also entered into a Master Purchase Agreement (“MPA”) with BitGo Prime LLC (the “Prime Broker”), which is a Delaware limited liability company, to facilitate digital asset trading through the Prime Broker’s proprietary electronic trading system. The agreement operates on a principal-to-principal basis, with each party acting for its own account and not as agent or fiduciary to the other party. All transactions are settled through, and custodied at, the Custodian under the CSA described herein. The Custodian maintains sole and exclusive custody of the Company’s TAO at all times, including during the pendency of trading activity by the Prime Broker. Notwithstanding the Company’s use of the Prime Broker to facilitate trading activities, the Prime Broker does not at any time take custody, possession, or control of the Company’s TAO assets. Pursuant to the MPA, upon confirmation of a trade, settlement occurs on a delivery-versus-payment basis, whereby the Prime Broker facilitates the simultaneous exchange of U.S. dollars from the Company’s custodial account maintained with the Custodian in consideration for the delivery of the corresponding TAO tokens to such account. This settlement mechanism is designed to mitigate counterparty risk by ensuring that the transfer of funds and digital assets occurs concurrently and that the Company’s TAO assets remain in the custody of the Custodian throughout the transaction lifecycle. Access to the Company’s trading account is generally restricted to users it designates. The Prime Broker uses the Custodian’s balance inquiry functionality to verify the existence of sufficient assets before executing trades. The MPA terminates automatically upon termination of the CSA, and the Prime Broker reserves the right to suspend or modify services at its discretion.

The TAO Daily

On September 22, 2025, we announced the launch of The TAO Daily, our comprehensive media, news, and insight platform dedicated to Bittensor (TAO) and the TAO ecosystem. The TAO Daily platform aims to highlight the Bittensor ecosystem developments and provide transparency into the rapidly growing world of decentralized AI. The platform also aims to centralize resources useful to TAO users and investors. Additionally, a new podcast, The TAO Pod, is hosted by James Altucher and Joseph Jacks, well-known TAO ecosystem leader and crypto treasury advisor to the Company.

Consultant Engagements

On June 8, 2025, the Company entered into a consulting agreement (the “Altucher Consulting Agreement”) with James Altucher and Z-List Media, Inc., pursuant to which Mr. Altucher will assist the Company with, among other things, crypto portfolio management; investor relations; strategic planning; deal flow analysis and advice related to sector growth initiatives. The Altucher Consulting Agreement has a term of one- year.

In connection with the entry into the Altucher Consulting Agreement, the Company issued to Mr. Altucher warrants to purchase up to an aggregate of 1,200,000 shares of Common Stock, consisting of: (i) a warrant to purchase up to 400,000 shares of Common Stock at an exercise price of $4.00 per share (the “First Tranche Warrant”), (ii) a warrant to purchase up to 200,000 shares of Common Stock at an exercise price of $6.00 per share (the “Second Tranche Warrant”), (iii) a warrant to purchase up to 200,000 shares of Common Stock at an exercise price of $8.00 per share (the “Third Tranche Warrant”) and (iv) a warrant to purchase up to 400,000 shares of Common Stock at exercise price of $12.00 per share (the “Fourth Tranche Warrant” and together the First Tranche Warrant, the Second Tranche Warrant and the Third Tranche Warrant, the “Consultant Warrants”) with each warrant subject to exercisability, forfeiture and such other terms as set forth therein. The shares of Common Stock issuable upon exercise of the Consultant Warrants are referred to herein as the “Consultant Warrant Shares”.

Pursuant to the First Tranche Warrant: (i) 200,000 Consultant Warrant Shares are immediately exercisable upon issuance and (ii) the remaining 200,000 Consultant Warrant Shares will be exercisable upon the retention of a mutually agreeable treasury manager. Pursuant to the Second Tranche Warrant, the Consultant Warrant Shares will be exercisable on the 3-month anniversary of the date of issuance. Pursuant to the Third Tranche Warrant, the Consultant Warrant Shares will be exercisable on the 6-month anniversary of the date of issuance. Pursuant to the Fourth Tranche Warrant, the Consultant Warrant Shares will be exercisable on the one-year anniversary of the date of issuance. Each of the Consultant Warrants expire five years from the date of issuance.

On August 26, 2025, the Company issued a press release announcing the engagement of Joseph Jacks as an advisor to its digital asset treasury strategy led by James Altucher. In connection with the engagement of Joseph Jacks, the Company entered into a consulting agreement with a term of one year with Mr. Jacks, pursuant to which the Company issued warrants exercisable for 100,000 shares of common stock, at an exercise price of $8.40 per share that will expire five years from the date of issuance.

The foregoing descriptions of the Altucher Consulting Agreement, the Consultant Warrants and the Jacks Consulting Agreement do not purport to be complete and are qualified in their entirety by reference to the full texts of the Altucher Consulting Agreement, Form of Consultant Warrant and Jacks Consulting Agreement, copies of which are filed as Exhibit 10.37, 4.25 and 10.38 to this Annual Report.

On October 13, 2025, the Company entered into a Securities Purchase Agreement (the “Series E Purchase Agreement”) with certain accredited investors (the “Series E Investors”), pursuant to which it agreed to sell to the Investors in a private placement (the “Series E Private Placement”) (i) an aggregate of 11,000 shares of the Company’s newly designated Series E convertible preferred stock, par value $0.001, with a stated value of $1,000 per share (the “Series E Preferred Stock”), initially convertible into up to 1,375,000 shares of the Company’s Common Stock at an initial conversion price of $8.00 and (ii) warrants to purchase up to an aggregate of 1,375,000 shares of Common Stock (the “Series E Warrants”). The shares of Common Stock issuable upon conversion of the Series E Preferred Stock are referred to as the “Series E Conversion Shares”. The Series E Private Placement closed on October 15, 2025.

The holders of the Series E Preferred Stock will be entitled to dividends of 7% per annum, compounded quarterly, which will be payable in cash. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Series E Certificate of Designations), the Series E Preferred Stock will accrue dividends at the rate of 15% per annum. The holders of Series E Preferred Stock are entitled to vote with holders of the Common Stock as a single class on all matters that holders of Common Stock are entitled to vote upon, with the number of votes per share of Series E Preferred Stock equal to the stated value of such share of Series E Preferred Stock divided by the then applicable Series E Conversion Price; provided, however that in no event shall the then applicable Series E Conversion Price be less than the “Minimum Price” (as defined in Nasdaq Listing Rule 5635(d)) on the date immediately prior to the date of the Series E Purchase Agreement.

Notwithstanding the foregoing, the Company’s ability to settle conversions is subject to certain limitations set forth in the Series E Certificate of Designations, including a certain beneficial ownership limitation after giving effect to the issuance of shares of Common Stock issuable upon conversion of the Series E Certificate of Designations or Series E Warrants.

The Series E Certificate of Designations includes certain Triggering Events (as defined in the Series E Certificate of Designations), including, among other things, the failure to file and maintain an effective registration statement covering the sale of the holder’s securities registrable pursuant to the Series E Registration Rights Agreement (defined below) and the Company’s failure to pay any amounts due to the holders of the Series E Preferred Stock when due. In connection with a Triggering Event, each holder of Series E Preferred Stock will be able to require the Company to redeem in cash any or all of the holder’s Series E Preferred Stock at a premium set forth in the Series E Certificate of Designations.

The Company is subject to certain affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends (other than dividends pursuant to the Series E Certificate of Designations), distributions or redemptions, and the transfer of assets, among other matters. Additionally, the Certificate of Designations contains a covenant requiring the Company to maintain minimum cash, cash equivalents, TAO tokens and investments in the Bittensor ecosystem in an amount equal to at least the aggregate Stated Value of the Series E Preferred Stock outstanding.

There is no established public trading market for the Series E Preferred Stock and the Company does not intend to list the Preferred Stock on any national securities exchange or nationally recognized trading system.

The Series E Warrants are exercisable immediately at an exercise price of $8.00 per share (the “Series E Exercise Price”) and expire five years from the date of issuance. The Series E Exercise Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment, on a “full ratchet” basis, in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series E Exercise Price (subject to certain exceptions). There is no established public trading market for the Series E Warrants and the Company does not intend to list the Series E Warrants on any national securities exchange or nationally recognized trading system.

GP Nurmenkari Inc. acted as the placement agent for the Series E Private Placement (the “Placement Agent”). In connection with the Series E Private Placement, pursuant to an Engagement Letter (the “Series E Engagement Letter”) between the Company and the Placement Agent, the Company agreed to pay the Placement Agent (i) a cash fee equal to 8.0% of the gross proceeds from any sale of securities in the Series E Private Placement plus a due diligence fee of $10,000, and (ii) warrants to purchase shares of Common Stock equal to 4.0% of the number of shares of common stock that the Series E Preferred Stock are initially convertible into, with an exercise price of $8.00 per share and a five-year term.

Registration Rights Agreement

The Series E Preferred Stock, the Series E Warrants, the Series E Conversion Shares and shares of Common Stock issuable upon exercise of the Series E Warrants (the “Series E Warrant Shares”) have not been registered under the Securities Act. In connection with the Series E Purchase Agreement, on October 13, 2025, the Company and the Investors entered into a Registration Rights Agreement (the “Series E Registration Rights Agreement”), pursuant to which the Company was required to file a resale registration statement (the “Registration Statement”) with the SEC to register for resale 150% of the Series E Conversion Shares and 150% of the Series E Warrant Shares promptly following the Closing Date, but in no event later than 30 calendar days after the effective date of the Registration Rights Agreement, and to have such Registration Statement declared effective by the Effectiveness Deadline (as defined in the Registration Rights Agreement). The Company will be obligated to pay certain liquidated damages to the investors if the Company fails to file the Registration Statement when required, fails to file or cause the Registration Statement to be declared effective by the SEC when required, or fails to maintain the effectiveness of the Registration Statement pursuant to the terms of the Series E Registration Rights Agreement.

June 2025 Private Placement

On June 9, 2025, the Company entered into a Securities Purchase Agreement (the “Series D Purchase Agreement”) with certain accredited investors (the “Series D Investors”), pursuant to which it agreed to sell to the Investors in a private placement (the “Series D Private Placement”) (i) an aggregate of 5,500 shares of the Company’s newly designated Series D convertible preferred stock, par value $0.0001, with a stated value of $1,000 per share (the “Series D Preferred Stock”), initially convertible into up to 1,833,333 shares of the Company’s Common Stock, par value $0.0001 per share at an initial conversion price of $3.00 and (ii) warrants to purchase up to an aggregate of 1,833,333 shares of Common Stock (the “Series D Warrants”). The shares of Common Stock issuable upon conversion of the Series D Preferred Stock are referred to as the “Series D Conversion Shares.”

GP Nurmenkari Inc. acted as the placement agent for the Offering (the “Series D Placement Agent”). In connection with the Series D Private Placement, pursuant to an Engagement Letter between the Company and the Series D Placement Agent, the Company agreed to pay the Series D Placement Agent (i) a cash fee equal to 7.0% of the gross proceeds from any sale of securities in the Series D Private Placement and (ii) warrants to purchase shares of Common Stock equal to 3.0% of the number of shares of Common Stock that the Series D Preferred Stock are initially convertible into, with an exercise price of $3.00 per share and a five-year term.

The terms of the Series D Preferred Stock are as set forth in the form of Certificate of Designations (the “Series D Certificate of Designations”), which was filed with the Secretary of State for the State of Delaware on June 9, 2025. The Series D Preferred Stock is convertible into Series D Conversion Shares at the election of the holder at any time at an initial conversion price of $3.00 (the “Series D Conversion Price”). The Series D Conversion Price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustment in the event of any issuances of Common Stock, or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable Series D Conversion Price (subject to certain exceptions). The Company is required to redeem the Series D Preferred Stock in equal quarterly installments, commencing on September 30, 2025. The amortization payments due upon such redemption are payable in cash at 107% of the applicable Installment Amount (as defined in the Series D Certificate of Designations).

The holders of the Series D Preferred Stock are entitled to dividends of 5% per annum, compounded quarterly, which will be payable in cash. Upon the occurrence and during the continuance of a Triggering Event (as defined in the Series D Certificate of Designations), the Series D Preferred Stock will accrue dividends at the rate of 15% per annum. The holders of Series D Preferred Stock are entitled to vote with holders of the Common Stock as a single class on all matters that holders of Common Stock are entitled to vote upon, with the number of votes per share of Series D Preferred Stock equal to the stated value of such share of Series D Preferred Stock divided by the then-applicable Series D Conversion Price; provided, however that in no event shall the then-applicable Series D Conversion Price be less than the “Minimum Price” (as defined in Nasdaq Listing Rule 5635) on the date immediately prior to the date of the Series D Purchase Agreement.

Series E Warrants Repricing

On May 18, 2026, the Company issued stock options to certain Company officers and directors with an exercise price of $4.80 per share. As a result, the Company issued, to holders of the Series E Warrants, an additional 953,335 warrants pursuant to the repricing triggered by the options issuance and repriced the Series E Warrants to $4.80 per share. On July 6, 2026, the Company issued warrants to a consultant with an exercise price of $3.85 per share. As a result, the Company issued to holders of the Series E Warrants an additional 565,478 warrants and repriced the Series E Warrants to $3.85 per share.

Comparison of the six months ended June 30, 2026 and 2025

The following table summarizes our results of operations for the six months ended June 30, 2026 and 2025:

We generated operating revenues for the six months ended June 30, 2026 and 2025 from staking TAO tokens of $477,400 and $3,962, respectively. The increase is attributable to purchasing tokens and staking for the entire 2026 period versus limited purchases and staking in the 2025 period.

Operating Expenses

Overview

Total operating expenses for the six months ended June 30, 2026 were $3,364,400 as compared to $4,108,960 for the six months ended June 30, 2025, a decrease of approximately 27.2%. The decrease in total operating expenses is due to the decreases in research and development expenses and warrant issuance costs partially offset by the increase in general and administrative expenses.

Research and Development Expenses

For the six months ended June 30, 2026, we incurred $60,455 in research and development expenses as compared to $209,371 for the six months ended June 30, 2025, a decrease of approximately 71.1%. These expenses were incurred primarily in connection with developing the potential AD therapeutic product. Of these expenses, for the six months ended June 30, 2026, $20,704 was incurred principally relating to our storage of drug product, $9,525 for clinical consulting services, $10,275 of amortization of prepaid licensing fees relating to the Stanford License Agreement and Mount Sinai License Agreement, $19,951 for development of alternative drug supply with Stanford University; comparatively, for the six months ended June 30, 2025, $110,648 was incurred principally relating to our product development and storage of drug product, $57,083 for clinical consulting services, $14,904 of amortization of prepaid licensing fees relating to the Stanford License Agreement and the Mount Sinai License Agreement, and $26,736 for development of alternative drug supply with Stanford University.

Our research and development expenses have decreased as our Cleveland Clinic trial for AD was concluded by the end of 2024 and our MS clinical trial was discontinued. Other development expenses might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1.

General and Administrative Expenses

We incurred $3,303,945 and $3,199,744 of general and administrative expenses for the six months ended June 30, 2026 and 2025, respectively, an increase of approximately 3.3%. The six months ended June 30, 2025 results included warrant issuance costs associated with the Series D Private Placement of approximately $700,000. For the six months ended June 30, 2026, $537,081 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $449,791 for the six months ended June 30, 2025. The increase resulted primarily from increased compensation for the Company’s Chairman as he became Executive Chairman during the second quarter of 2025; $299,319 was incurred for legal expenses versus $400,957 for the 2025 comparable period. The higher legal fees for 2025 are based upon the Company changing its business strategy, restructuring and financing; $1,178,823 was incurred for outside operations consulting services during the six months ended June 30, 2026, versus $504,289 for the comparable period in 2025. The higher amount for the 2026 period reflects non-cash expenses associated with warrants issued to cryptocurrency experts totaling $796,612; $18,269 was incurred for travel expenses during the six months ended June 30, 2026, versus $26,328 for the comparable period in 2025 as Company officers and directors conducted due diligence for strategic investments in 2025; $238,133 was incurred for investor relations services during the six months ended June 30, 2026, versus $204,435 for the comparable period in 2025; $138,541 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services during the six months ended June 30, 2026, versus $140,711 for the comparable period in 2025; $330,902 was incurred for insurance during the six months ended June 30, 2026, versus $279,934 for the comparable period in 2025. The increase is attributable to higher premiums relating to the Company’s cryptocurrency treasury strategy; $244,552 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other during the six months ended June 30, 2026, versus $220,358 for the comparable period in 2025; and $318,325 was recorded as non-cash stock options compensation expense during the six months ended June 30, 2026, versus $972,941 for the comparable period in 2025. The decrease for the current period is attributable to granting of stock options awards during the third quarter of 2025 partially offset by the issuance of stock options awards during the current quarter.

Other Income / Expense

We recognized total other expense of $2,157,574 for the six months ended June 30, 2026 as compared to other expenses of $13,025,911 for the six months ended June 30, 2025, which consisted, for the periods 2026 and 2025, of unrealized gains on digital assets, and for both 2026 and 2025, interest income on funds deposited in interest-bearing money market accounts and investments in short-term U.S. treasury bills, and changes in fair value of warrant and derivative liabilities. The decrease in interest income and unrealized gains on treasury bills totaling $274,398 is primarily attributable to the decrease in cash balances over the period and lower interest rates. The total decrease in other expense is primarily attributable to the decrease in the fair values of warrant and derivative liabilities of approximately $12.7 million and income attributable to the Yuma partnership investments of $31,870, partially offset by the unrealized loss on digital asset investments of approximately $1.6 million and the decrease in interest income as noted above.

Net Loss

We recognized a net loss of $5,044,574 and $17,130,909 for the six months ended June 30, 2026 and 2025, respectively. The decreased losses were primarily attributable to the decrease in research and development expenses and general and administrative expenses and warrant issuance costs partially offset by the decrease in other expenses.

Net Cash Provided by (Used in) Investing Activities

Net cash used in investing activities was $0 for the six months ended June 30, 2026 compared to $4.5 million for the six months ended June 30, 2025. The cash used in investing activities for the six months ended June 30, 2026 was $0 versus the six months ended June 30, 2025 which was for the purchase of crypto currency for the Company’s treasury strategy.